U.S. Appeals Court Rules Against Apple In e-Book Case

Associated Press

NEW YORK — Apple violated antitrust laws by colluding with publishers to raise electronic book prices when it entered a market in 2010 that had been dominated by Amazon.com, a divided federal appeals court panel said Tuesday.

A three-judge panel of the U.S. 2nd Circuit Court of Appeals in Manhattan ruled 2-1 that a lower court judge correctly found that Apple Inc. had violated the law to upset Amazon.com Inc.'s control of the market.

The appeals court also agreed that U.S. District Judge Denise Cote was right in 2013 to order injunctive relief to ensure that the company, based in Cupertino, Calif., did not commit additional violations of antitrust laws.

In a statement, Apple said that the ruling did nothing to change the fact that it did not conspire to fix e-book pricing.

"We are disappointed the court does not recognize the innovation and choice the iBooks Store brought for consumers," it said. "While we want to put this behind us, the case is about principles and values. We know we did nothing wrong back in 2010 and are assessing next steps."

The U.S. Department of Justice and 33 states and territories originally sued Apple and five publishers. The publishers all settled and signed consent decrees prohibiting them from restricting e-book retailers' ability to set prices. Two publishers joined Apple's appeal.

In settlements with lawsuits brought by individual states, Apple has agreed to pay $400 million to be distributed to consumers and $50 million for attorney fees and payments to states, although it will pay nothing if it ultimately wins on appeal. Lawyers for the states say the $400 million combined with $166 million already turned over by publishers represent double the maximum amount that consumers lost in the conspiracy.

Connecticut Attorney General George Jepsen said that his office, and that of Texas Attorney General and the U.S. Department of Justice, conducted a two-year investigation that led to the settlements.

"This enforcement action and the settlements that arose from it are representative of my continued commitment to ensuring Connecticut consumers the benefits of an honest, open and competitive marketplace," he said in a prepared statement Tuesday. "I'm extremely proud of the work of my staff and of the exemplary cooperation amongst state attorneys general and the Department of Justice that has led to today's ruling."